A lot of people don’t love Volkswagen’s new Tesla-fighter, the ID.4 SUV. The rash of so-so reviews is awkward given how hard the company has pumping its own tires on this machine and how aggressively it’s switching to electric vehicles.
A few days ago, VW CEO Herbert Diess detailed, yet again, the German giant’s EV aspirations to analysts in its “Power Day” presentation. The crowd seemed to come away with one conclusion: VW will be Samsung to Tesla’s Apple — namely slightly cheaper prices and far less brand swagger, but slick products that sell like plywood before a hurricane.
Accepting the status of alternate choice, the plan B, is a savvy strategy, but it takes some subtlety. Typically, the underdog product needs to one-up its rival on at least one feature. For Samsung smartphones, it was the display screen. Jet.com won its e-commerce beachhead in Amazonia with shipping discounts. Allbirds scurried around Nike with wool and normcore styling.
Volkswagen’s potential edge is still TBD. Perhaps, it will be choice; the global empire of factories plans to rolls out 70 different electric vehicles by 2028. Build quality could be a differentiator as well; VW bosses have long been neurotic about things like panel gaps.
The Samsung strategy may work out. However, Diess may just have an Apple in his pocket. Porsche, arguably the most precious of its 12 brands, is flipping the switch on electric vehicles as well. And it has the name recognition, luxury credentials, and performance chops to rival Tesla (and it remains far more profitable).
Not surprisingly, there has been grumbling about a Porsche IPO, which would raise cash to invest in battery plants, unlock the value of the brand, and sling-shot it out of the lumbering conglomerate to the head of the EV race. Fiat-Chrysler pulled off a similar stunt when it cut Ferrari loose in 2015.
Bloomberg Intelligence reckons an IPO would value Porsche at about $130 billion (and based on Ferrari figures, that’s likely a conservative estimate). Keep in mind, Volkswagen currently – with Porsche in-house — has a market value around $156 billion.
Frankly, those two numbers make little sense, but neither do auto investors these days. The trick here is a bit of a bait and switch. An independent Porsche would be a straight pipe to EV-crazed investors showering money on SPACs and startups with little more than concept vehicles to show for their efforts.
Diess, for one, has been irked by those electric animal spirits. In a world of bulls and bears, they are puppies. “Our valuation is still locked in ‘old auto,’” he told Bloomberg in January.
A Porsche cut free on public markets — the brand that built a gobsmacking hybrid supercar eight years ago — might win some of that puppy love. Meanwhile, it could still benefit from all the parts-sharing that goes on in an auto conglomerate. Its chassis, for example, would still underpin Audis. Its transmissions would still be bought in bulk along with Lamborghini and the rest of the family.
Bloomberg analysts expect Volkswagen to be selling more electric vehicles than Tesla by 2024. At Porsche, an electric version of its best-seller, the Macan SUV, is due out next year and at the same time it will be moving thousands of its high-end Taycan sedans at a price around $190,000. Bloomberg pegs the profit margin on those machines at 53%.
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